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NEW YORK (Reuters) – The top 10 U.S. money market fund managers put money to work in short-term French and German government agency debt in February, part of a bigger move into core Europe that is likely to endure in coming months,cheap oakley sunglasses, say investors and analysts.

Germany saw an inflow of at least $15.1 billion from the fund managers, an increase of 21 percent. France gained at least $13.9 billion, an increase of 18 percent. No other countries saw as large an inflow, according to a Reuters analysis of money market fund flow data provided by iMoneyNet.

Nine of the 10 placed larger bets on France, while eight of them put more money to work in Germany, according to the analysis. Pittsburgh-based Federated Investors made the largest move into Germany, while New York financial giant BlackRock placed the largest bet on France.

Fragile market sentiment at the end of 2011, the result of Greece’s drawn out debt crisis, drove yields on short-term debt instruments up,cheap oakley sunglasses, enticing fund management companies to snap up those securities, analysts say.

The traditional early-in-the-year deployment of investor cash into new instruments was met with a flood of money made available by the European Central Bank to backstop strained European financial institutions. This served as the biggest factor in improving risk sentiment in the euro zone, and has since driven yields lower as buying increased.

In 2011,fake oakleys, European banks’ financial troubles drove investors to buy more debt from Canadian, Australian and Japanese banks. But the February data shows a pullback from Canadian and Australian banking debt while funds bought more in Japan.

In December and February the ECB funneled over 1 trillion euros into the financial system via ultra-cheap 3-year funding operations known as long-term refinancing operations (LTROs). The move was part of an effort to head off a credit crunch that threatened the currency bloc’s future.

“The LTROs are a double-edged sword,” said John Donohue, chief investment officer for J.P. Morgan Asset Management Global Liquidity. “They calmed everybody down and took the liquidity tail risk off the table for money funds. But there is less supply now for us to get invested.”

Ultimately this may mean banks, companies, and governments will need less short-term funding, a so-called crowding out effect. That could result in fewer investment opportunities for money market funds, which generally prefer taxable investments thanks to their higher yields.

Taxable money market funds held nearly $2.4 trillion in assets at the end of February, according to the data. Of that, the top 10 fund managers control nearly $1.8 trillion. Generally, money market funds are viewed as safe alternatives to bank accounts, provide corporations and investors with an easily accessible storehouse for their excess cash.

Reuters’ analyzed data from iMoneyNet, a Massachusetts-based money market fund tracker which gathers data from the funds, their custodial banks and the Securities and Exchange Commission. Reuters considered only taxable money market funds in its analysis and excluded variable-rate demand notes, debt often guaranteed by foreign banks but originating outside the United States.

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Among five euro zone countries identified in the data, money market fund allocations rose 16 percent to $246 billion during February. The biggest percentage winner was Belgium, followed by Germany, France, and the Netherlands. Spain, one of the countries at the center of the euro zone’s fiscal woes, was the only loser among the five. However, iMoney Net could not identify a country of origin for all holdings in its data.

While Belgium ranked first with an increase of 34 percent, the increase came from a much lower base of $1.2 billion at the end of January. Germany gained 21 percent on a base of $71 billion, while France gained 18 percent on $79 billion.

Outside the euro zone, the top managers also decreased allocations to the U.K., Sweden and Switzerland.

Fidelity quadrupled its holdings of French financial company commercial paper from $990 million to $3.8 billion,cheap oakley sunglasses. It bought $2.8 billion worth of paper issued by banking giant BNP Paribas. The firm’s money market funds also doubled their holdings of German government agency repos to nearly $4 billion.

Fidelity’s money funds also made the biggest percentage increase into German assets, nearly doubling their holdings to $4.4 billion at the end of February. BlackRock’s money funds showed the biggest percentage increase in French assets, nearly doubling their holdings to $9.9 billion.

Legg Mason and Goldman Sachs were the only two to dial down their exposure to Germany during February. Schwab was the only manager to cut back on French holdings,cheap oakley sunglasses.

“The (economic) data looks better and Europe seems to have calmed down for now, so I think fund managers continue to put money to work there but they are keeping (tenors) short,” said Donohue, whose division oversees, globally,cheap oakley sunglasses, $450 billion in money funds.

Europe wasn’t the only winner. In the U.S., Treasury debt attracted significant interest, drawing about $9.1 billion in new capital from the funds. But the gain was more than offset by a $23 billion withdrawal from government agency debt among the funds. Fannie Mae holdings shrank by $6.3 billion, while Freddie Mac declined by $8.7 billion.

Despite the increases in Europe, Barclays Capital says money funds are far from gorging themselves on the region’s debt.

In May of 2011, money fund lending to French banks stood at $230 billion, dropping as low as $70 billion in December and has climbed back to $120 billion, according to Barclays money market strategist Joe Abate. He added that in May the weighted average maturity on French bank debt was 44 days but is currently “about 2 days and dominated by repos.”

“I definitely think there is a ‘risk on’ mentality in the market… At the end of last year money funds probably found their allocations to Europe were too low and that they were cautiously dipping their toe back into the market because they optimal allocation was not zero,cheap oakley sunglasses,” said New York-based Abate.

“If you look at the tenor of what they are lending, it is still very short and concentrated. The improvement in lending to French banks has been sizeable in a percentage term, but in dollar terms it is not dramatic,” he said.

(Additional reporting by Richard Leong; Editing by Diane Craft)